Tuesday, December 11, 2007

Japan's Current-Account Surplus Widens on Exports (Update1)

By Keiko Ujikane

Dec. 12 (Bloomberg) -- Japan's current-account surplus widened for a 10th month in October as exports to Asia and Europe rose and investors earned more from overseas assets.

The surplus expanded 45.7 percent to 2.23 trillion yen ($20.1 billion) from a year earlier, the Finance Ministry said in Tokyo today. The median estimate of 36 economists surveyed by Bloomberg News was for the gap to swell to 2.03 trillion yen.

Shipments to China and the European Union are cushioning a slowdown in exports to the U.S., where the worst housing recession since 1991 is crimping demand. The surplus in the broadest measure of trade also reflects the willingness of Japanese investors to buy securities overseas that have higher returns than those at home.

``The current account surplus will probably keep expanding as exports remain solid and investments in overseas securities generate steady income,'' Susumu Kato, chief economist at Calyon Securities in Tokyo, said before the report was released.

The yen traded at 110.88 per dollar as of 9:09 a.m. in Tokyo from 110.76 before the report was published.

Export growth accelerated to 13.7 percent in October from a year earlier to 7.11 trillion yen, the second highest on record, the ministry said. Imports rose 8.3 percent to 5.95 trillion yen, the highest ever.

The income surplus, the difference between money earned abroad and payments made to foreign investors in Japan, rose 17.4 percent to 1.39 trillion yen, according to today's report.

Japanese investors bought a net 2.91 trillion yen of overseas stocks, bonds and short-term bills in October, government data showed last month. Net purchases rose to 3.28 trillion yen in September, the most since October 2005.

Japan's 0.5 percent benchmark interest rate is the lowest among major economies.

The current account tracks the flow of goods, services and investment income between Japan and its trading partners. It includes trade not shown in the customs-cleared balance.